Correlation Between IShares Regional and SPDR SP
Can any of the company-specific risk be diversified away by investing in both IShares Regional and SPDR SP at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Regional and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Regional Banks and SPDR SP Insurance, you can compare the effects of market volatilities on IShares Regional and SPDR SP and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Regional with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Regional and SPDR SP.
Diversification Opportunities for IShares Regional and SPDR SP
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and SPDR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares Regional Banks and SPDR SP Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Insurance and IShares Regional is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Regional Banks are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Insurance has no effect on the direction of IShares Regional i.e., IShares Regional and SPDR SP go up and down completely randomly.
Pair Corralation between IShares Regional and SPDR SP
Considering the 90-day investment horizon iShares Regional Banks is expected to under-perform the SPDR SP. In addition to that, IShares Regional is 1.43 times more volatile than SPDR SP Insurance. It trades about -0.02 of its total potential returns per unit of risk. SPDR SP Insurance is currently generating about -0.01 per unit of volatility. If you would invest 5,876 in SPDR SP Insurance on August 21, 2025 and sell it today you would lose (57.00) from holding SPDR SP Insurance or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Regional Banks vs. SPDR SP Insurance
Performance |
| Timeline |
| iShares Regional Banks |
| SPDR SP Insurance |
IShares Regional and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Regional and SPDR SP
The main advantage of trading using opposite IShares Regional and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Regional position performs unexpectedly, SPDR SP can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SPDR SP will offset losses from the drop in SPDR SP's long position.| IShares Regional vs. iShares Insurance ETF | IShares Regional vs. iShares Transportation Average | IShares Regional vs. iShares Currency Hedged | IShares Regional vs. WisdomTree International LargeCap |
| SPDR SP vs. SPDR SP Emerging | SPDR SP vs. SPDR Portfolio Europe | SPDR SP vs. iShares MSCI Italy | SPDR SP vs. iShares Insurance ETF |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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